Sentiment down to third-lowest reading since 2012 due to high rates and economic uncertainty
The housing market's slowdown showed further signs of strain in June, as more builders turned to price cuts and incentives to entice wary buyers facing tough economic conditions.
According to the latest report from the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder sentiment for newly constructed single-family homes dropped to 32 in June, a two-point slide from May. This marks one of the lowest readings in over a decade, only surpassed by the figures in December 2022 (31) and the pandemic-driven low of April 2020 (30).
“Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” NAHB chairman Buddy Hughes said. “To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”
The report comes one day before the Federal Reserve announced its latest rate decision. The Federal Open Market Committee (FOMC) is expected to hold rates steady, despite calls for rate cuts from both the White House and leading economists.
Builders cut prices on new homes
The June survey shows that 37% of builders lowered prices, the highest share recorded since NAHB started monthly tracking in 2022. That figure compares with 34% in May and 29% in April. Builders reported an average price cut of 5% in June, consistent with reductions seen each month since November. The use of sales incentives also ticked upward to 62% from 61% in May.
As the U.S. navigates an uncertain economic landscape shaped by tariff policies and unresolved trade talks, most economists believe the Federal Reserve will maintain its current interest rate stance well into the second half of 2025. https://t.co/VpLq3133t0
— Mortgage Professional America Magazine (@MPAMagazineUS) June 10, 2025
“Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets,” NAHB chief economist Robert Dietz said. “Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.”
Regional sentiment mixed
The HMI, which has been conducted monthly for over 35 years, measures builders' views on the present and future outlook of the single-family housing market. Participants rate current sales conditions and six-month expectations as “good,” “fair,” or “poor,” and assess potential buyer traffic as “high to very high,” “average,” or “low to very low.” The overall index is seasonally adjusted, with scores above 50 suggesting more builders view conditions favorably than not.
In June, each of the index's three main components declined. The measure for current sales conditions fell to 35, a two-point decrease. The index for future sales expectations dropped to 40, also down two points. Buyer traffic declined to 21, marking the weakest reading since November 2023.
Regional sentiment was mixed over the past three months. The HMI average in the Northeast edged down one point to 43, while the Midwest gained one point, rising to 41. The South saw a three-point decline to 33, and the West fell by four points to 28.
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